In 2006, I predicted that accounting as we knew it then would be redundant by the turn of the decade. At the time, technology was starting to advance, and accounting scandals dominated the headlines.
Two years later, the world plunged into a financial crisis, and the profession was partly responsible.
Market for Lemons
One reason for the 2008 global financial crisis was the concept of information asymmetry.
This happens when one party in a transaction has either more or better information than the other party. The latter is at a disadvantage because, without high-quality information, they can’t make sound decisions.
Information asymmetry creates an information gap resulting in market inefficiency, low-quality trade, unfair advantage, and anti-competitive practices.
The need for credible information became crucial in the years after the global crisis, as did the need for people who could bridge the information gap using technology.
Enter the Chief Value Officer
COVID-19 fanned the flames of change in the accounting profession, squashing years of technological and professional innovation and evolution into a few short months.
Today, clients are aware that cloud-based accounting solutions automatically reconcile accounts, generate reports, flag patterns, and behavioural anomalies. They can get information instantly and create financial and compliance reports at the touch of a button – no accountant needed.
According to Sage’s Practice of Now 2020 research, accountants agree that customers want more from them, like advice on strategy and technology. The caveat? They don’t want to pay extra. The solution? 82% of South African respondents agree that they need to increase the pace of technology adoption to stay competitive.
So, we find ourselves on the cusp of the next evolution of the profession.
We’re shifting away from reporting, maintaining records, and submitting tax returns to give the type of advice that helps businesses manage their affairs more effectively.
In fact, I no longer see us as accountants but as Chief Value Officers (CVOs): professionals who understand the value that their clients’ businesses generate – beyond the numbers. With a better understanding of the value of information in the context of business models and economies, CVOs can help to improve their clients’ agility and competitiveness and convert information flow into cash flow.
To understand the role of the CVO, it helps to understand the concept of information brokering.
In practice, information brokers collect seemingly irrelevant and unrelated publicly available data and convert it into useful databases or reports that they sell to clients.
The most successful brokers understand exactly what their client needs and then dive into the data to find the golden nuggets that clients are willing to pay for.
Information brokering isn’t new, but it’s becoming particularly relevant to the accounting profession.
As they generate more data and as insights become instantly available, businesses need someone with a sharp mind to sift through, organise, and analyse the information. CVOs are in the perfect position to facilitate information leasing on behalf of their clients.
Much like information brokering, information leasing is a way to create value through collaboration.
In sharing – or leasing – information within their ecosystems, businesses grant other entities the right to use their data assets to uncover insights into cost drivers and inefficiencies, as well as opportunities to monetise data.
Take the supply chain, for example. A distributor leases its data to a manufacturer. The manufacturer analyses information relating to routes, destinations along those routes, and schedules and costs for transporting goods to another province. Knowing this, the manufacturer can optimise warehouse efficiency by aligning production and delivery with the distributor’s business model. The result? A decrease in the cost per unit either bumps up revenue or can be passed on to the customer through competitive industry prices.
The Chief Value Officer can connect the dots between disparate data sources to tell the story behind the data.
Tech as a tool rather than a solution
The profession’s biggest shift is to stop thinking of technology as a solution to prepare financial reports.
Rather, technology is a tool for better business management that enables accountants to achieve a certain level of service to their clients’ benefit, such as the ability to drill down and ask specific questions.
They can customise dashboards to show clients only the information they’re interested in. A CFO’s dashboard, for example, will show sales, expenses, bank balance, income due today, expenses to be paid today, etc.
A warehouse manager’s dashboard will show information like inventory movement, cost per unit, and delivery times – all of which impact warehouse efficiency.
Innovation in the accounting profession isn’t about technology. It’s about how you use the technology to produce the kinds of insights that businesses don’t know they need.
Technology enables you to use the information and take your clients on an adventure rather than using it to do a specific function. There’s room for creativity in accounting – why not present the insights in video format? Or on an app in a storybook-like experience?
To do this, CVOs don’t only need high-quality, verified data; they also need the technological competency to find opportunities to monetise that data. But here’s the thing: competency is not the same as skill, and there isn’t enough of it in the market.
Competency vs skill
There is still a disconnect between the skills taught at university and the skills – or rather, the competencies – required of accountants in the real world.
Sage’s research found that 65% of South African accountants agree that technology helps them serve their customers faster. Still, a near equal amount (63%) of firms plan to train their teams in financial business advisory services.
It’s generally accepted that accountants need a particular skill set: Good with numbers, understanding of tax law, and a knowledge of things like invoicing, balance sheets and consolidation. But every time there’s a change in technology or legislation, they need to upskill.
Accounting, as we know it, is automated. Practices, as we know them, no longer exist. Degrees, in their current form, are not entirely necessary.
So, what’s left?
- Cognitive and critical thinking skills
- Marketing and communication skills
- Interpersonal skills,
- Business advisory skills,
- Business economics skills,
- Information integrity skills, and
- Technological knowledge that can be applied to a range of different business scenarios.
In a word: Competence. Unlike skill, competency makes it easier to adapt to a changing environment.
The profession has changed a lot in the last decade, and it’s arguably undergoing its biggest transformation yet. As we remain socially distanced yet physically connected, the volumes of data available to CVOs will skyrocket.